The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1887-11-14
Business Terms Defined.

Some of tho business terms used In thu
published accounts Of some Of the recent
failures have puzzled . good many people out
side Of the business world. The words used
to designate certain commercial paper have
not carried with them sufficient evidence OF
their meaning TO make It clear to the I'M
initiated. Here are few definitions that may
be useful,
Business Papor''--This 10 the ordinary pa.
per used by business men, an ordinary note,
for instance. B owes A q debt. b gives A 9
note for It, and A takes the note to tho bank
and gets 1t discounted That 10 fair sample
Of legitimate business paper.
Accommodation Papcr"-This 10 paper up
on which loans from banks and the like are
effected. For instance, A is in business aud
has not enough capital at hand wherewith to
operate. His credit is good, and he goes to 9
bank aud explains that he wants to raise Thu
or that amount Of money. He gives his nsts
for the amount, and the bank takes this either
with or without endorsement, or with or with
out collateral security. A mans credit ha,
considerable TO do with his ability to foat hit
accommodation paper.
"Gilt-Edgs Paper''-This is q term used
by bank men merely to indicate that the pa
por, Of whatever nature 1t NAV be, is first
class. w
"Klte Paper''-Perhaps this is best dehues
by an example. A New Haven firm Is In
need Of funds and so is Hartford firm.
They both have good credit The New Haven
firm sends to the Hartford arm for its note
for say $4,000 and the Hartford firm send,
the note and gets In return the New Haven
FIRMS note for the same amount There 4,
no actual consideration In either case. The
Hartford firm gets Its note discounted, and S
does the New Haven firm, aud they have
raised $40, 900 sin wind" OF course, providing
they turn out insolvent. This 10 one form Of
"kite paper" Another form, and worse one,
10 where house with big line Of credit start
up concern IN some distant city or State fol
the mere purpose OF manufacturing paper
which the house itself can raise money on
For instance, A does big business In New
Haven and has q large limo Of credit. he hai
one of these paper manufacturing houses in
Milwaukee. This house sends him note for
$1,000, in payment for goods ostensibly. The
note 10 discounted here IN New Haven. The
money Is raised at an opportune time, and all
is well unless the firm goes up. Then th,
form Of kite paper" is nothing short Of abso.
lutte swindling.
Trust Receipt 10 an example OF .
trust receipt transaction which win servo as a
definition. A wants to import a cargo Of iron
but has not the money to do II with He goei
to b, banker, and says: "If you import thai
cargo OF iron for me, will have 1t shipped &c
your order aud will not part with IL without
your consent, and when do part with 1t the
proceeds will be turned over to you" Th'
iron is shipped to AS warehouse. The com
munication between A and B relative to tn,
transaction and their agreement are the trust
receipts. n A should prove insolvent, the
question is, who does the iron belong TOT"
In New York, It has been decided that II 10
AS In Connecticut one Of the most promi.
dent lawyers In the city said 1t is az yet a.
open question. American Ctltipatoy.